Last week, the legislation was before the House of Representatives, along with the Objective of Super bill, following which it was reported that a number of Independent MPs spoke out against it highlighting the unintended consequences of taxing unrealised gains and lack of indexation.
SMSF Association CEO, Peter Burgess, said the Teal crossbenchers have always been strong supporters of the association’s position on the taxation of unrealised capital gains and indexation.
“As we have said on many occasions this new tax introduces an unprecedented treatment of assets, and it’s encouraging to see this now being called out,” he said.
“It could have far reaching implications for future tax changes beyond superannuation.”
In parliament last week, North Sydney representative Kylea Tink said the proposed tax was a “moment-in-time cash grab” and asserted it introduces an unprecedented treatment of assets in Australia.
“At the same time it doesn’t seem to be in any way, shape or form future-proofed,” she said, adding it was reasonable to expect asset classes held by super funds, such as property, to fluctuate over time,” she said.
She added that despite submissions from leading industry associations, there had been little change to the bill since it was first proposed.
Moreover, Goldstein MP Zoe Daniel said taxing unrealised gains of large balance super accounts was “out of line with their treatment in other areas of tax policy where capital gains are normally taxed on realisation, not accrual” and added that the “refusal to entertain indexing the cap” was the “superannuation equivalent of bracket creep”.
Meanwhile, Wentworth MP Allegra Spender argued the tax could potentially deter investment from SMSFs in venture capital in early-stage start-ups.
“There’s a real danger that we will basically disincentivise angel and other investors making these early or midsize investments in their super funds,” Spender said.
“Superannuation has a disproportionate sway in the Australian investment space, it’s where people put their discretionary income … so at a time when cash is already going out of that [start up] system, they could lose more.”
Burgess said the government has previously acknowledged that economic growth requires investment and the common ingredient for success in a more challenging economic world is business investment.
“SMSFs have historically been a strong source of venture capital. Taxing unrealised capital gains will discourage investment, particularly investment in technology where it is common for valuations to increase significantly long before the payment of any income,” he said.
Barry Fitzhenry
The Govt must be totally broke to start such a scheme
They are! That’s what I think too and have been telling people.
It is taking over 5 months to get part reimbursement for community service work for our veterans as an example.
It is taking almost the same to get an ATO refund on a BAS in my experience as well.
Then I hear they are chasing old tax bills, some, for just a few cents. This government is desperate. They are prepared to now steal our life’s savings to pay for their ineptitude – as if lying and cheating are not enough. I guess its a case of “in for a penny, in for a pound” as the old saying goes. They believe that they have the numbers to get in again, so they really don’t care.
The Govt must be totally broke to start such a scheme
That the ATO calculate all of this and apply the tax themselves is of great concern. There is no self-assessment or other checks and balances in place. Kind of like putting the wolf in charge of the hen-house when you think about it.
The ATO should notify funds which member, and those funds should be in a position to make the calculations. The methodology for the calculation should be based on actual, not unrealised. It is ridiculous to have a fictional value called Unapplied Transferrable Negative Superannuation Earnings where losses are deferred and likely the fund cannot clawback overpaid tax from unrealised income as a result. We need more real world experience drafting legislation not Theoretical Numpties!